HAPPENING NOW! At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. JOIN US VIRTUALLY.
Despite improvements in housing affordability, homebuyers are showing little interest as property sales continue to decline.
Pending home sales have dropped 5.7 percent year over year, the biggest decline in nine months, Redfin reported on Thursday. Mortgage-purchase applications are down 14 percent or 2 percent week-over-week.
Although it is becoming more affordable to purchase a home, prices and payments are still near record highs.
The median U.S. monthly house payment was $2,667 during the four weeks ending July 28, according to Redfin, the lowest level since March. Falling mortgage rates and sale prices are causing payments to decline.
The weekly average mortgage rate sits at 6.78 percent, down from May’s five-month high of 7.22 percent. The median home-sale price is down nearly $4,000 from its early July peak at $392,563.
Redfin agents report that some prospective homebuyers are waiting to learn the outcome of the upcoming election before purchasing a home.
A lack of desirable listings has also contributed to the decline of home sales.
New listings have shown the smallest increase since November, up 4 percent year over year. With nearly two-thirds of homes sitting on the market for 30 days without going under contract, it is fair to say that listings are not matching buyer expectations.
The small increase in listings can also be attributed to limited demand, though Redfin agents have seen a demand for turnkey homes in desirable neighborhoods.
Agents expect sales to pick up as mortgage rates are projected to decline. In comments yesterday, Federal Reserve Chair Jerome Powell dropped hints that the central bank may be ready to cut rates if it sees the economy weakening in the months ahead, possibly as early as September.
“Local buyers are still worried about affordability, especially since wages haven’t caught up with home-price growth and inflation has cut into their budgets,” Boise, Idaho, Redfin agent Nicole Stewart said. “But now that rates are declining, some fence-sitters are getting off the fence.”
